After a positive start in June, the trend in oil price mostly remained downward as the market continued to gauge the oil demand supply balance, showed an economic report Sunday.

The surge in oil prices during April-May 2016, which was primarily on the back of production disruptions, was countered by announcements in June by some oil majors to increase investment in drilling reacting to firm oil prices. Oil price continued to decline during July with OPEC crude declining by close to 10 percent mtd, the report by KAMCO indicated.

The production disruption in Nigeria had minimal impact on oil prices as it was offset by an increase in supply of Canadian oil producers who recovered and restarted operations after the wildfire that crippled production for over two months, it said.

On the economic front, data from Japan and China pointed to a slowdown in economic growth although vehicles sales in China continued to remain high. Moreover, concerns about a slowdown in global growth due to the impact of Brexit also pulled down oil prices by close to 5 percent intraday after the referendum vote in Britain.

There were fears that Brexit could lead to recessionary pressure in overall Europe that could significantly affect oil demand from the region, it added.
In its latest monthly oil report, OPEC released its initial oil market demand and supply forecast for 2017 in which it said that production outside the OPEC would continue to fall in 2017 as seen in 2016, but at a slower pace.

According to the report, world oil demand is expected to grow by 1.2 mb/d to average at 95.3 mb/d in 2017 with a majority of this growth coming from non-OECD countries.

On the other hand, non-OPEC oil supply in 2017 is expected to decline by 0.1 mb/d to average at 55.9 mb/d as growth in Brazil and Canada are expected to be offset by supply shrinkage from Mexico, the US, and Norway.